Strategic Performance Formulation and Decomposition - An Entrepreneur's Perspective

How to formulate the company's business goals for this year? How to decompose the company's overall goals into performance goals for each employee? How to get employees to take the initiative to take on work tasks? These are the questions that many entrepreneurs face when setting strategic goals for company development. In this increasingly competitive era, the effectiveness of strategic management is increasingly important.

To this end, "CEConline", which takes "excellent management practice and achieve enterprise elites" as its mission, invited many entrepreneurs to participate in the "CEConline Wisdom Salon" in mid-March 2014 to work with management experts. Explore the topic of "from strategy formulation to performance target decomposition". On this issue, the participating entrepreneurs were divided into 5 groups, and based on a real adaptation case, they had a live discussion on the formulation and decomposition of strategic performance.

Case Introduction:

Company A is an export-oriented optoelectronic enterprise integrating R&D, production and sales. Its products are mainly LED display and LED lighting, and its sales capability is relatively leading in the industry.

The company's sales performance has grown rapidly, with an average annual growth rate of more than 50% for five consecutive years. The company started with a capital of 100,000 yuan, and has grown to more than 300 personnel, including 5 senior executives above the director, 60 sales personnel, 5 procurement personnel, 5 R&D personnel, 20 administrative and financial logistics personnel, and production personnel. More than 200 personnel. Last year, the annual sales exceeded 100 million yuan, and the net profit reached about 15%.

The company has always attached great importance to the sales business. The salary incentive system for sales staff has always followed the "low base salary + high commission" model. The income gap of sales staff is large due to different abilities.

Now, the company's executives are meeting to discuss the company's overall strategic goals for the new year. The boss proposed that at least 250 million should be made in 2014, and the ideal goal is 300 million, and the domestic market share should be increased to 50 million yuan.

At this time, the sales director stood up and said that this is an impossible task, because:

1. The market competition is homogeneous, and everyone is fighting a price war;

2. The current international market volatility is relatively high Large;

3. Some sales staff have few orders and low income, low efficiency in individual combat, capable people are busy, and those who do not have orders are too idle;

4. Product development capabilities are not strong, and customers have many new requirements cannot be satisfied.

5. Product quality is unstable, and sometimes delivery is not timely.

Then, the production manager also stood up and said, I also think this goal is difficult to achieve, because:

1. The high turnover of skilled workers in the factory leads to unstable production quality;

2. Large single Come, workers often have to work overtime, and everyone has many complaints;

3. The purchasing department often delays supply, materials are not in time, and the quality of raw materials is questionable.

Seeing that the ball was kicked to him, the purchasing director quickly defended and said, "There is nothing we can do. The funds for procurement are often not available in time. Our existing suppliers are small, and every time a large order comes, they want goods In a hurry, only a few suppliers can supply at the same time, and occasional raw material quality problems are inevitable. It is still necessary to develop some new products with large profit margins."

The R&D director immediately added: "The company has been in technical The investment in research and development is seriously insufficient. With only 4-5 guns, we have to work overtime to deal with existing customers. We are so busy that we still have time and energy to develop new products. Besides, the treatment of our research and development personnel is not good. High, technical talents with strong development ability cannot be retained."

After listening to everyone's words, the director of human resources kept pouring bitterness: "Our company actually has a lot of staff, but we lack an effective set of technical school assessment management. It is impossible to measure whether you are good or bad in the system. Although our human resources department has been urging you several bosses to give departmental assessment targets, you always say that you are busy and do not pay, which makes me a punching bag for the boss. Alas!"

Now, ask each group to start a discussion by role and list your group's solutions on a large sheet of paper:

1.How should Company A's 2014 strategic goals be formulated?

2. In order to achieve this goal, what should the company boss, sales department, R&D department, purchasing department, production department, and human resources department do?

Group E:

We are the first group. This is the conclusion reached by all our colleagues. Our goal is 250 million, and the domestic share is 50 million. First of all, we conduct industry analysis. The LED industry is a sunrise industry, and it is in the rising period and the outbreak period of the industry. The second is the analysis of past performance, the annual growth rate is 50%. The third is product line analysis. Now there are two product lines, one is LED display and the other is LED light. The fourth is the analysis of our existing cases. In the current situation, because we have a team of more than 60 people and a production scale of more than 200 people, it is concluded that the business target in 2014 is 250 million, and the domestic market share is 50 million.

In terms of sales, first of all, we set up a 30-person internal trade department on the sales side. The second is to increase the number of foreign trade personnel to 100. How to manage it? For sales management, we implement divisions and sub-teams, managed by the team leader, and can operate small teams. Third, the business commission method has been changed. Based on the existing management method, our team leader is a high salary + team commission, and the team members are a low salary + high commission method. Fourth, the promotion and marketing expenses are increased, such as participation in magazines, exhibitions, and network promotion.

In terms of personnel, first, the existing production personnel are 200, and the personnel will be increased to 400. Second, we have added the issue of the treatment of skilled workers. Third, we buy automated production equipment to replace simple work. Fourth, the existing R & D personnel increased to 15 people. Performance bonuses for R&D personnel have increased. Optimize existing product lines and reduce costs.

In terms of procurement, first, we need to develop high-quality suppliers. The current suppliers are relatively small and poor, and the number of suppliers should be increased. The second is to increase the quality control system. The quality control system is very important to ensure that the supplied products meet our requirements. The third is to ensure cash flow and establish partnership with suppliers, so as to support our goal of 250 million.

The situation of human resources, the first is how to adjust the personnel structure; the second is the salary incentive system; the third is the decomposition of assessment indicators; the fourth is training.

I want to add some topics. The indicators of our company itself can be clearly seen. This company's research and development capabilities are not very strong. The main body is sales and production. We put sales first. If sales are doing well, production must come second. Such as R & D, procurement, personnel all do cooperate. For example, in terms of research and development, it is impossible to develop many products in one year, so we focus on improving the overall production efficiency, that is, optimizing products that are more suitable for production. This is the first part. In the second part, the products that have been developed will be launched as much as possible this year. Our focus is both sales and production.

Group A:

This topic is a strategic goal. I think it is a sales goal at most. There is no profit requirement, no development appeal, and where does the strategy come from.

The first is the decomposition of the goal. When a goal comes out, how to cooperate with each department and how to decompose the solution to this goal. After the decomposition, it is necessary to see whether it is feasible to achieve these goals, what difficulties exist at present, and what measures should be taken to ensure the achievement of the goals.

Then we need to do a summary, not to set goals that can be achieved by one department, but to cooperate with each department, so everyone needs to communicate next. There are some differences here, and we need to communicate.

In addition, the consistency of goals, after the summary, we have a consistent goal, so that everyone has a unified goal and will not produce selfishness.

Let's take a look at what to do with this goal. Every system is very important, and without anyone, nothing can be done.

First of all, let's talk about sales, from 100 million to 300 million, this growth challenge is quite big, this is a huge challenge and leap. How to achieve 300 million? The expansion of sales and the expansion of existing products will increase by 50 million this year. We are very confident that we will achieve 150 million. The scale of the existing products is conservative. If we work harder to achieve 200 million, it will be very powerful. How to achieve 250 million or 300 million? We have to introduce new products and increase sales of new products. We now have 60 people, some of whom are very competent, and some of whom are just messing around to eat. How can we optimize the sales team, how can we effectively adjust the results of the entire sales team according to products, channels, and markets, so as to increase the sales share in a targeted manner.

In addition, the existing channel capacity is relatively saturated, and the growth rate will not produce a three-fold increase, so it is necessary to expand the sales channel.

In terms of R&D, although the LED industry has been around for so long, our R&D is relatively weak now, and weak areas are easy to make achievements. We must increase R&D efforts and use new materials and new technologies to reduce costs.

In terms of procurement, we are a small company with a long and scattered supply chain. We need to make large-scale breakthroughs. How to have larger suppliers and strategic partners to provide us with long-term cooperation and more support? It is the biggest thing the purchasing department has to do.

In terms of production, there are three things: the first is to expand the scale of production, the second is to control production costs, and the third is to improve production efficiency.

Human resources, cooperate with the achievement of the entire strategic goal, our personnel recruitment, personnel training, employee training, 300 million enterprises without employee care is also terrible, so the burden of human resources is very heavy, how to cultivate, retain It's their job to live with the right people.

Boss, the first is to set goals, the second is to publicize and implement the goals, and the third is to manage goals. It must be supported by resources, and there must be supervision and guidance in the implementation process, and risk control should be carried out. The final goal is achieved and the goal is motivated.

Group B:

From the perspective of the market background, the enterprise should be from 100 million to 300 million. This is a typical three-generation enterprise, and there must be incentives. The word "incentive" is not suitable.

In terms of product builds, I shared with the group. The company's entire expansion is 250 million, which is no problem, all departments must cooperate with the implementation.

The method of product management and implementation, from a vertical perspective, is to reduce costs on the basis of existing products, the second is to dig for basic customers, and the third is to increase the number of orders, so the 60 salespeople remain unchanged, and the sales structure Don't make changes.

There are 3 people in the development department, and we have added 3 people to reserve some technical products. Purchasing 5 people should be enough, the main target is 10% growth. The structure period is extended, and the capital flow requirement is extended by 1 month. In terms of manufacturing, I think 20% of personnel changes are adjustments, mainly upward adjustments. The next thing to do is to cooperate with the input of the people in the manufacturing department.

Sales are divided into domestic trade and foreign trade. The sales model remains the same, because it will be completed quickly in one year, so the structure will not be significantly adjusted.

The proportion of the increase in the company's investment, I think the part of the company's investment is this part of the investment in the operation, and the overall structure should not change too much, so as to achieve the goal.

The question of performance appraisal, why should it be completed? This is the purpose of performance appraisal, and we need to use a distribution model to reach an agreement. Since the company's turnover has been achieved, the target profit is 20 million. Last year's target was 15 million, and the turnover was 250 million. We must sacrifice profits. In my opinion, since the profit has grown, the company should complete it in various departments, and the head of each department should increase a certain amount of revenue. Take a part of the profits for the company's benefits, the benefits will increase, and the benefits of employees and managers will increase.

In this part of performance appraisal, our idea, all the indicators made by the performance appraisal department are to supervise the implementation, from 100 million to 250 million a year, an increase of 50% for five consecutive years, so this enterprise requires speed, Therefore, no major adjustments should be made under the condition of ensuring the speed.

I'm done, thank you all.

Group C:

Our team's sales target is 300 million, and we differentiate each quarter based on the growth of existing sales in 2014. 20 million and 30 million in the first and second quarters, and 50 million in the third and fourth quarters. In order to achieve this sales target, overseas markets may have to increase profits by 50%, because our sales are 250 million in overseas markets. In the domestic market, the optoelectronics industry has a particularity. I am also in the optoelectronics industry, and we will increase the marketing staff of the first department.

In terms of R&D, we will increase product R&D efforts in the first and second quarters. We will use 5% of sales as R&D investment, increase the team of 10 people, and strive to put the product into the market in the third and fourth quarters, so as to obtain a sales volume of 10%. breakthrough.

In the role of the factory manager, we will achieve a balance of human resource needs in the second quarter. Our production staff will increase to about 300 in the second quarter. The production in the second, third and fourth quarters is a relatively stable arrangement to ensure the continuation of production. sex. On the one hand, it will increase the income of production line workers and ease their irregular work problems.

In terms of procurement, I have also been involved in procurement before. Our team has re-organized suppliers according to the total demand of 300 million yuan, and specially designed the management, assessment and elimination mechanism for suppliers. If there is a quality problem, we have an elimination system. We focus on developing and managing large-scale suppliers. In addition, it is to cooperate with the research and development of product-specific components. The technology of optoelectronics may be different every quarter, and the time for iterative development is very fast. It is more important to pay attention to the latest progress of each component in procurement. This requires the procurement department and the R&D department to do a tight fit.

In terms of human resources, we give more consideration to the task decomposition of each department, and support more exclusive human resources recruitment, etc. It is more important to make detailed optimizations in performance appraisal, because the current method of low base salary + high commission is difficult to retain talents. There will be strong people who are strong and weak people who are weak. We will optimize human resources. Strong people let him lead the team, not a single sales, we will do a comprehensive configuration in human resources, and hope to strengthen the training of each department, because no one is weak, only through human resources and various departments. Coordination to enhance combat effectiveness.

Boss, it is more about doing a good job in target management and support for various departments, as well as the distribution of bonuses.

The above are the considerations of our team.

Group D:

Some things are similar, how do we set our goals? Just started a survey. Our boss just started to issue 300 million tasks, each department did a careful discussion, asked some questions, and summarized these questions. Based on these opinions and market information, it is absolutely feasible to finalize 250 million. Each of our departments follows such a policy to implement.

As for the boss, he will give us some general directions, coordinate the main contradictions, and track the rights and responsibilities of the main responsible persons of each department.

Marketing department, that is, the business department, the goals of the business department will be decomposed in detail, mainly to do some sorting out on the existing personnel. It can be seen from the materials that we are relatively scattered, we will make a group according to this situation, and there is a task in each group, and then the performance assessment reflected in this task and the requirements for target growth, etc. The business will reduce a certain profit margin through certain means and market strategies on the basis of the current customers. In the first half of the year, it will make a relatively good growth on the basis of the original customers, so as to help the rapid breakthrough in the second half of the year. The breakthrough in turnover, on the one hand, is the increase in the number of customers, and on the other hand, the increase in customer purchases.

The business department in turn requires the R&D department to make a planned investment and launch of new products. The general idea is to expand the market in the first half of the year, attract more customers, and convert it into market value in time in the second half of the year. .

In the R&D department, we must have some business elites to do business. The purchasing department cooperates with the R&D department as much as possible in solving the material aspects. The production aspect is mainly the integration of suppliers, and the general Internet is used as much as possible to avoid some troubles in production. The production department mainly considers two points. One is to increase equipment and increase the training of personnel to make them more proficient in production. In addition, it is also considered to outsource orders to cooperating counterparts when appropriate, so as to increase production without increasing personnel and input.

In terms of human resources, it cooperates with the stability and recruitment of personnel in various departments, as well as the promotion of the company's corporate culture.

Give 30 seconds to refill. I am the boss of this team. Relatively speaking, a strategy is not based on how much money you make this year, but where your company will be in three or five years. If I were the boss of the company, I would reposition the company. I I feel that the company is now in a state of chaotic shotguns. If this is a coordinate, where is the competitor’s coordinate, where is our company, and how will we market in three, five, or ten years later, whether to win by supply chain or by quality and customer service, or by conducting business with customers Strategic cooperation wins, so some aspects must be better than others. For this company, it doesn’t matter how many billions it can make this year. With its past strength, it can be eaten. The important thing is to lay a solid foundation to make profits better in the future.